Question

The following information is for Gable, Inc. and Harlowe, Inc. for the recent year. Gable, Inc. Harlowe, Inc. Sales $ 800,000 $ 800,000 Variable costs 400,000 200,000 Contribution margin 400,000 600,000 Fixed costs 200,000 400,000 Income from operations $ 200,000 $ 200,000 What total amount of net income will Harlowe, Inc. earn if it experiences a 10 percent increase in revenue?

Answer 1

$260,000

Step-by-step explanation:

The computation of the total amount of the net income earned is shown below:

Sales Revenue $800,000 ×1.10 $880,000

Less Variable Costs $200,000 × 1.10 -$220,000

Contribution Margin $660,000

Less: Fixed Costs -$400,000

Income from operations $260,000

We simply deduct the variable cost and the fixed cost from the sales revenue so that the income from operations or net income could come